The manager of the Citywire Selection fund said that in the short term the outlook for North America is ‘cloudy’ as a result of the onset of the fiscal cliff at the start of January, which could see as much as 5% wiped off GDP.

US manufacturing on the up

However, the economy is positioned to fare better over the longer term because of a range of factors including competitive electricity prices and a rise in manufacturing jobs – a sector that has overtaken non-manufacturing for the first time in around 35 years.

‘There are lots of manufacturing companies now based in the US rather than abroad,’ Focke said. ‘Whirlpool, for example, has for the first time in 10 years built a factory in the US.

‘Airbus is also going to the States for manufacturing because it’s more likely to get orders there. Over the next two to five years the US will do extremely well, because of cheap energy, good wages, a willing workforce and good demographics.’

The Mexican connection

Focke has recently bought Kansas City Southern, a freight railway company that runs a line to Mexico that carries a large amount of goods.

‘Mexico is set to increase its production of cars by around 40% over the next four years,’ Focke said. She said there are four new auto plants being built in Mexico – Honda, Mazda, Nissan and Audi – which will benefit Kansas City Southern. ‘Mexico is also expanding its port – Lazaro Cardenas.’

The manager said the fund is also overweight aerospace defence relative to the benchmark by around 1%, because there are significant changes afoot in the composition of planes, which could save around 20% in energy. ‘We are invested in companies which are contributors to big suppliers like Airbus,’ said Focke. ‘We also hold some Boeing, and Spirit, which makes plane parts.’

The fund is overweight technology by around 2.5%, with holdings in IBM. ‘We also hold Google and Microsoft, which is looking very cheap,’ she said.

‘One of our biggest overweights is Jarden Corporation,’ she said. ‘It has moved well recently – it’s a well-run company and one of the better performers.’

Backing GE

Focke has also added General Electric recently because there is a lot of technology unique to the firm. Although it has had quite poor performance for a long time, it ‘could be GE’s time to turn’, she said.

Conversely, Focke is underweight industrials because she is nervous about economies slowing in Europe and China. ‘We also lightened up on Procter and Gamble because it’s fully priced. A lot of funds have launched with high yield targets, and so many high yield stocks now look a bit pricey.